When Sir John Browne - as he was then - took over as chief executive of BP in 1995, the oil giant's business development planners were set a project: devise a strategy for the company after 2008, his retirement date. One insider calls the post 2008-era "life after John", with only a little irony.
Lord Browne of Madingley is one of the most lionised British businessmen of recent times, adored by an almost fawning City and business press alike. He catapulted BP from, as he put it, "the top of the second division" to the number-three super-major behind Shell and ExxonMobil, with the $50bn (£28bn) acquisition of Amoco in 1998. This was followed a year later by the $25bn acquisition of Arco, allowing BP to leapfrog Shell into second place in world rankings of publicly quoted oil companies.
Two years ago, BP's domestic rival Shell was tearing itself apart after misstating a fifth of its proven oil reserves, resulting in the departure of Lord Browne's counterpart, Sir Philip Watts, and a major overhaul. In comparison, BP could apparently do no wrong.
But in recent times, Lord Browne's halo has started to slip. An explosion at a BP Texas refinery killed 15 workers last year. A catastrophic oil spill in Alaska earlier this year and BP's involvement in the construction of the Baku-Ceyhan pipeline have dented the environmental credentials the company worked so hard to establish.
The investment bank JP Morgan Cazenove stirred things up still further last month when it published a research note recommending that BP would be valued more highly by the City if it split its downstream business, such as refineries, from its upstream oil and gas production. Some suspected that the publication of the report was BP's way of floating the idea to the City, a claim denied by the company.
So as Lord Browne prepares to report first-quarter results on Tuesday - tipped by analysts to be another record - is the behemoth he has created at risk of coming apart?
It would be hard to claim there is a crisis at BP. Its profits last year were $22bn, almost a third more than 2004. With oil hitting a new record of $74 per barrel in London last week, profits will continue to grow. But this cannot disguise one of the biggest issues facing the industry, and one from which BP is not immune: how to keep finding enough oil to replace the reserves it is pumping.
New oilfields large enough to make a dent on the balance sheet of a company the size of BP, which pumps four million barrels of oil per day, are becoming hard to find. This is forcing majors to go hunting in deep water, which is more expensive and riskier, or in more inaccessible areas, like the Arctic. BP's involvement in a project to look for oil under the polar icecap has worried campaigners, who point to its poor environmental record at its Prudhoe Bay project in Alaska.
Analysts say the average organic reserve replacement ratio - which ignores reserves obtained by buying other companies - is below 100 per cent for the big oil firms. This means that companies are not able to replace every barrel of oil pumped with new discoveries, and so will eventually run out.
BP is better off than most. According to data from the research firm Wood Mackenzie, BP has the best organic reserve replacement ratios of its peers, at 128 per cent between 2001 and 2005. This compares to 96 per cent for ExxonMobil and 61 per cent for Shell. It is also most efficient at finding oil: Wood Mackenzie estimates its return on upstream investments between 2001 and 2004 is 25 per cent, making it the market leader; the next best is ExxonMobil at 18 per cent.
Almost a quarter of BP's oil production comes from a $7bn joint venture with TNK in Russia, which was set up in 2002. Derek Butter, head of corporate research analysis at Wood Mackenzie, suspects that Lord Browne will try to pull off one more big deal to cement his legacy before he steps down. "Companies are under pressure to spend their huge cash piles and boost their reserve replacement ratios," he points out.
Analysts speculate that China, where BP has been cosying up to the state-owned oil company Sinopec, could be its next target. In a recent interview Lord Browne did not rule out a deal with Sinopec, but he would need all his powers of diplomacy given China's political sensitivities about ceding control over natural resources.
Under Lord Browne, BP has made great play of its supposed environmental credentials, launching the rebranding exercise "Beyond Petroleum" in 2000. Late last year the company announced plans to spend $8bn on renewable energy technologies such as solar power over the next decade, and revived its Beyond Petroleum publicity campaign. Roger Higham from Friends of the Earth believes it is no accident that this coincided with the completion last year of the Baku-Ceyhan pipeline project, in which BP holds a 30 per cent stake. The 1,099 mile pipeline - running from the Caspian Sea to the Mediterranean and expected to transport around 1 per cent of the world's total production - is environmentally controversial. Mr Higham says that the Beyond Petroleum campaign would not have sat easily alongside last year's newspaper reports of protests against the pipeline. To add insult to injury, the project is now 30 per cent over budget.
BP's commitment to renewable energy sources, such as wind power, has also been questioned. Its pledge to invest $8bn over a decade pales into insignificance when compared with the $15bn it will spend on capital investment across the whole of its business this year alone.
Some accuse BP of "greenwashing". But Sam-antha Lacey, an analyst for responsible shareholding at the Co-operative Insurance Society, which has a 0.4 per cent share in BP, disagrees. "Lord Browne should be applauded for holding BP up as a beacon for the sector for its environmental strategy," she says. "It's not just PR."
Ms Lacey adds that the company is far more transparent on environmental reporting than its peers. It recently agreed, she says, to join a round-table group to discuss how to mitigate the impact of palm oil cultivation - the only oil company to agree to do so.
But she argues that BP should do more to match its boast of being Beyond Petroleum. "The company has to be careful to implement this throughout its business," she says. "We have concerns that its otherwise good risk management failed in Alaska, for example.
"But BP has a wider social duty to be investing more than its committed $8bn over 10 years into developing its renewables and low carbon emissions business."
BP is expected to choose an internal candidate to replace Lord Browne. The three executives thought to be in contention for the top job are the current head of exploration and production Tony Hayward, the executive director Iain Conn, and the chief of refining and marketing John Manzoni. No decision has yet been taken, but for all the plaudits, the legacy Lord Browne leaves them may not turn out to be so rosy after all.Reuse content